China's Evergrande seeks $1.1 billion to help fix debt woes; term sheet

FILE PHOTO: An exterior view of China Evergrande Centre in Hong Kong, China, March 26, 2018. REUTERS/Bobby Yip

HONG KONG (Reuters) - China Evergrande 3333.HK, the country's No.2 property developer, is looking to raise up to $1.1 billion in a share placement to help refinance some of its debt and build up its working capital, according to a term sheet seen by Reuters.

The Hong Kong listed company will sell 490 million shares at between HK$16.50 and HK$17.20 a share to raise between $1.04 billion and $1.087 billion.

It then has an option to sell a further 120 million shares to raise another $266 million if the stock is priced at the top of the range.

If the so called green shoe option is exercised the company could raise up to $1.35 billion.

The price range is a 11.1% to 14.7% discount to the stock’s closing price of HK$19.34 on Monday.

Evergrande, the most indebted developer in the country, has been scrambling to raise cash as China’s government tackles what it considers excessive borrowing in the real estate development sector with new debt ratio caps.

Since August, it has taken steps including raising $3 billion from selling a stake in a property management unit ahead of an IPO, offering a 30% discount on properties to boost sales, and reaching a deal with investors holding $12.66 billion of its unit to not redeem their holdings.

Concerns have mounted in recent weeks that the developer was headed for a major cash crush if it could not get government approval for a backdoor listing in Shenzhen, that has languished for four years.

Evergrande’s share placement plan is due to be finalised on Wednesday and was launched late Tuesday when the Hong Kong market was shut as the city faced a typhoon warning.

Reporting by Scott Murdoch; additional reporting by Clare Jim, editing by Louise Heavens